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This article is penned down by Ojasvi Gupta, a student of Faculty of Law, Banaras Hindu University, Varanasi. It attempts a comprehensive take on all matters and concerns on the process related to the acquisition and transfer of real estate in India by a non-resident Indian.


The property market in India has been witnessing rapid growth over the last decade, with noticeable growth in the interest for purchasing real property in India from persons residing both inside and outside of India. In this article, we examine the relevant rules and regulations that govern the method through which non-resident Indians [NRIs], foreign nationals, and foreign nationals of Indian origin acquire or transfer immovable property in India.

Who can purchase immovable property in India

In order to determine who can or cannot purchase immovable property in India, it would be prudent to first establish what categories of persons are stated in the law. They are as follows:

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  • Indian citizen

The Citizenship Act of 1955, provides four ways through which a person can acquire Indian citizenship. It could be through birth, descent, registration, or naturalization as listed in Sections 3, 4, 5, and 6 of the Act, respectively.

  • NRI

A person who is staying abroad for employment purposes or business-related purposes is generally referred to as an NRI. Legally speaking, NRI – a non-resident Indian is an Indian citizen who lives in a foreign country for more than 180 days in a financial year.

  • PIO

Abbreviated for persons of Indian origin, a PIO is an individual who has now settled in a foreign country. Any of the following people could be a PIO:

  • A person who was born in India or whose parents/grandparents/great grandparents were born in India or were permanent residents in the country or any of the territories that became a part of the country, based on the Government of India Act of 1935.
  • A person who owned an Indian passport in their name in the past.
  • A person who is the spouse of an Indian citizen, residing in India only.
  • OCI.

Abbreviated for an overseas citizen of India, an OCI is a person who is formally a citizen of another country but is granted several rights and freedoms enjoyed by Indians. It should be noted that India does not allow dual citizenship, OCI is as close as it gets. They could be:

  • A spouse of an Indian citizen, being married for at least two years.
  • Children of an Indian parent or grandparents.
  • Children and grandchildren of OCI holders.
  • Foreign National.

At last, after removing the above-mentioned categories and citizens of India residing in the country, we are left with the individuals called foreign nationals.

The Foreign Exchange Management Act, 1999 (FEMA) along with the Regulations issued by the Reserve Bank of India (RBI) govern the process of acquisition and transfer of real estate in India to a major extent. Out of the mentioned categories, PIO, OCI, and NRI can acquire and transfer immovable property in India with some specified terms and conditions, whereas a foreign national cannot do so.

Whether NRI/PIO can acquire agricultural land/ plantation property/ farm house in India

An NRI/PIO cannot acquire agricultural land/plantation property/farm house under general permission, which applies to residential citizens in India. Although such proposals can be assented to, after fulfilling the requirement of specific approval of the Reserve Bank, which considers the proposal in consultation with the Government of India to decide the allowance of acquisition. 

An NRI can purchase and hence acquire (with specified payment methods provided below), any immovable property in India except agricultural land/plantation property/farmhouse. Transferring the property under this category has some restrictions. The party to which it is transferred should be one of the following:

  • A citizen of India who resided in some foreign country.
  • A person of Indian origin not residing in India.
  • An Indian resident.

Though an NRI can own agricultural land/plantation property/farmhouse, they can inherit this property further only to Indian citizens permanently residing in India. 

Similarly, a PIO also cannot acquire agricultural land/plantation property/farmhouse by way of purchase but it can be inherited. Subject to certain conditions, a PIO can inherit real estate in India from another NRI or PIO as well. RBI’s permission should be obtained when the inherited property goes in favor of a citizen of a foreign state, who is resident outside India.

Another essential factor that needs to be kept in mind is that the person from whom the NRI inherits the property, the original owner, should have acquired the same property in accordance with the provisions of the law of foreign exchange, prevalent at that time. Therefore, in instances where the permission was required to be obtained, no immovable property can be inherited by the NRI or PIO, without specific permission obtained from the RBI.

Do any documents need to be filed with the Reserve Bank of India after the purchase

Purchase of residential/commercial property comes under general permission and as such a PIO is not required to file any specific documents with the Reserve Bank of India. The same is the case with an NRI. Real estate other than the agricultural land category, generally requires following the documents:

  • OCI card (In case of OCI)
  • Passport (In case of NRI)
  • Passport size photographs
  • Address proof
  • Pan card (Permanent account number)

How many residential/commercial properties can NRI/PIO purchase under the general permission 

The statutory rules and regulations do not stipulate any restriction as such on the number of residential/commercial properties that can be purchased by NRI/PIO. The only limitation placed is that they can repatriate sales proceeds, i.e. convert the money in the currency of the country they are residing in, of only 2 residential properties outside India. The amount of repatriation is limited to USD 1 million per Financial Year, subject to satisfaction of Authorized Dealer (AD) Bank and payment of applicable taxes. 

This manner of repatriation applies to foreign nationals too, on the condition that the property should have been inherited from a person resident in India. Sale proceeds in foreign exchange are not permitted to repatriate to Nepal and Bhutan.

Can a foreign national who is a person resident in India purchase immovable property in India

FEMA provides for a foreign national resident in India to acquire immovable property in India. This applies to individuals of all countries with the exception of Pakistan, Bangladesh, Nepal, Bhutan, Sri Lanka, Afghanistan, China, Iran, Macau, Hong Kong, or the Democratic People’s Republic of Korea (DPRK), who would require prior approval of the RBI in order to do so.

Can an office of a foreign company purchase immovable property in India 

An office, branch, or another place of business, (with the exception of a liaison office) of a foreign company in India, established with all the necessary approvals, is eligible to purchase immovable property in India. This property must be only used for the purpose of business or anything auxiliary to carrying on such activity and it goes without saying that all applicable laws, rules, regulations, or directions in force should be duly complied with.

The business entity or the concerned person of the company has to file a declaration with the Reserve Bank within a period of ninety days from the date they acquired the property. This declaration is called the International Payment Instruction form (IPI). The person resident outside India also has the option to mortgage the property for the same effect. An immovable property purchased for the above-mentioned purpose can be transferred through mortgage by a non-resident to an AD bank as a security for any borrowing.

However, persons of 11 countries need to obtain RBI permission for acquiring such property for a period exceeding five years. These countries are Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan, Macau, Democratic People’s Republic of Korea (DPRK). Citizens of these nations, irrespective of their residential status, cannot acquire or transfer immovable property in India, without prior permission taken from RBI.

Likewise, a foreign company for the purpose of establishing a Branch Office or other place of business in India, in accordance with FERA / FEMA regulations, can acquire any real estate in India. The payment for acquiring such property is done through proper banking channels. This is known as Inward remittance – when someone receives money from an NRI abroad. Properties of this category could be used as a mortgage with an Authorised Dealer (a category of banks notified by RBI) as a security for other borrowings. In cases when these companies wind up their business/office, the sale proceeds require the permission of RBI for repatriation. 

Further, acquisition of commercial property by business entities to set up Branch Offices in India which are originally incorporated in the neighboring countries of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan would require prior approval of the Reserve Bank. Nonetheless, if the foreign company has established a Liaison Office, it can not acquire immovable property. In such cases, Liaison Offices can take property by way of the lease only, that too for a time period not exceeding 5 years.

Whether immovable property in India can be acquired by way of gift

An NRI/PIO can acquire residential/commercial property by way of a gift from any of the following – resident of India, an NRI, or a PIO. However, a foreign national or a non-Indian origin residing outside India cannot be gifted residential/commercial property in India. The option to acquire agricultural land/plantation/farm house in India by way of gift is not available to a person resident outside India.

NRI/OCI may give residential or commercial property as a gift to NRIs or OCIs who are in relation with them. These relatives are defined in Section 2(77) of the Companies Act, 2013. Foreign nationals of non-Indian origin require prior approval of RBI for gifting the residential/commercial property.

In the case of agricultural land/plantation property/farmhouse, NRI/OCI can give it as a gift to an Indian citizen who resides in the country only. A foreign national would require prior approval of the RBI to qualify as a gift receiver. A non-resident can transfer residential/commercial property as a gift.

Analyzing it all, it can be said that, NRI/ PIO may gift residential/commercial property to:

  • A person resident in India; or,
  • An NRI; or
  • A PIO;
  • A foreign national of non-Indian origin with prior approval from the Reserve Bank.

An NRI/PIO/Foreign national, who owns an immovable property under the agricultural category can gift it to a citizen resident in India. To do so, a foreign national of non-Indian origin will again need prior approval from the Reserve Bank.

What are the accepted modes of payment for property acquired in India

Payment for immovable property in India is accepted through funds remitted via normal banking channels (includes branch banking, mobile banking, and ATM channel of banking) and is subject to the appropriate taxes and other duties/ levies imposed in Indian territory. Besides the manner stated above, the payment can also be made out of funds held in NRE (a Non-Resident External account, as the name suggests, is used by an NRI to facilitate deposit earned in foreign currency) / FCNR (Foreign Currency Non-Resident (Bank) deposits) / NRO (NRO account can be loosely termed as the bank account for regional functions, it is used to manage the income earned by NRI in India only) accounts of the NRIs/ OCIs, maintained in India. Payments can not be made through either travelers’ cheques or currency notes of a foreign denomination. No payment shall be made outside India for this purpose. 

Can a foreign national of non-Indian origin and resident outside India purchase immovable property in India

A foreign national of non-Indian origin, resident outside India cannot purchase real estate in India. Although they may take immovable property on lease provided it is not for a period exceeding 5 years. Approval of RBI is required to increase the lease period from 5 years. However, they are permitted to acquire one immovable property (other than agricultural land/plantation property/farm house) jointly with their spouse, provided the spouse is NRI or OCI and otherwise not prohibited from such acquisition. 

Joint acquisition by the spouse of an NRI or an OCI

A person resident outside India (i.e., a foreign national), excluding a non-resident Indian or an overseas citizen of India, who is a spouse of an NRI or an OCI may acquire an immovable property (other than agricultural land/farm house/plantation property), jointly with his/her NRI/OCI spouse. Such an acquisition would follow these rules:

  • The payment for transfer shall be either in the form of 
    • Funds received from a foreign country through banking channels (inward remittance) in the bank account of the NRI/OCI. 
    • Funds held in a non-resident bank account, which are maintained according to the provisions of the FEMA Act, supplemented by the regulations made by the RBI. 
  • No payment for the transfer of immovable property will be accepted through the traveler’s cheque or in the form of foreign currency notes or by any other mode that is not permitted specifically. 
  • The solemnized marriage must be registered and subsisted for at least two continuous years immediately before the date of the acquisition of the property.
  • The non-resident spouse must not be, due to any previous discrepancy, prohibited from such acquisition.

Can a non-resident give his residential/commercial property

As per Indian law, there is no limitation on accepting any type of property i.e. commercial or residential as a gift or acquired through inheritance. There is no restriction. The donor could be a resident Indian, PIO, or NRI. The only condition is that agricultural land cannot be gifted. Agricultural land or plantation property or farmhouse can only be inherited. Simply put, NRIs cannot purchase agricultural land but can inherit the agricultural land. Furthermore, this inherited agricultural land can only be sold to the resident Indians. 

Rules are slightly different for persons of Indian origin. PIOs can inherit any real estate including the agricultural category from a person who acquired the same property in compliance with the foreign exchange law or FEMA, whichever was in effect at the time of acquisition. A PIO is authorized to gift the residential or commercial property to persons including resident Indian, NRI (citizen of India), and PIO as well.

Can foreign embassies/diplomats/consulate general purchase sell immovable property in India

Foreign Embassies/Diplomats/Consulate Generals (diplomatic mission located in a foreign country, but not in its capital city) can purchase as well as sell real property in India other than agricultural land/plantation property/farmhouse after obtaining clearance from the Ministry of External Affairs, Government of India. The mode of payment, as discussed above, should be foreign inward remittance through normal banking channels. 


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